Management’s Discussion and Analysis
Operating Environment SaskEnergy monitors a number of important external factors that could influence financial performance. Saskatchewan is experiencing ongoing uncertainty due to tariffs that may impact various industries within the provincial economy and the supply chain. Sectors such as energy, potash and agriculture may be particularly vulnerable to future macro-economic changes. SaskEnergy remains vigilant in monitoring these developments and is committed to collaborating with customers, suppliers and stakeholders to ensure the maintenance of affordable natural gas rates in a sustainable manner. Inflation Consumer price index (CPI) inflation has been volatile, fluctuating in response to the Bank of Canada’s policy adjustments and other macroeconomic events affecting the Canadian economy. SaskEnergy has observed the impacts of inflation on areas such as third-party transport and other resources, which is reflected in some operating and maintenance expenses. The Company remains committed to seeking efficiencies and achieving operational excellence in day-to-day operations and capital construction. These efforts aim to mitigate the effects of inflationary pressures, while ensuring the delivery of safe and reliable natural gas services enabling industries to utilize natural gas for their operational requirements. Saskatchewan Natural Gas Prices From April 1, 2024, to March 31, 2025, the Western Canadian natural gas markets experienced several notable trends and developments. The anticipated increase in demand from the startup of operations at LNG Canada’s facility in Kitimat, British Columbia did not meet initial expectations. Throughout the first three quarters of 2024-25, Western Canadian natural gas prices remained low due to high production levels, modest seasonal pipeline maintenance, and warmer weather resulting in both modest demand and elevated storage levels. Consequently, Western Canadian natural gas prices diverged significantly from those in the rest of North America. Despite the low prices at AECO, gas prices in other parts of North America surged due to colder- than-average temperatures.
The AECO daily index averaged $2.05 per GJ during the fourth quarter of 2024-25, compared to $2.36 per GJ in the previous year. Throughout 2024-25, the index averaged $1.30 per GJ, in contrast to $2.33 per GJ during 2023-24. Traditionally, most natural gas in Saskatchewan is priced at a differential to the AECO price, with this differential for the year averaging a premium of $0.10 per GJ compared to $0.07 per GJ the year prior. SaskEnergy’s natural gas price risk management program is designed to mitigate the impact of price volatility on the cost of gas, a challenge faced by many jurisdictions across the country. The Company was able to participate, to a degree, in leveraging lower costs available through the market, as well as through marketing opportunities in Western Canada.
AECO Monthly Index Historical Prices
AECO Monthly Index Historical Prices
$8.00
$7.00
Limited Export Capacity from Alberta 2015-Present Average Price $2.46/GJ
Forward Price at March 31, 2025 Average Price: $2.82/GJ
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
$0.00
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